Middle Easterners blessed with oil wealth love to flaunt their gold. Don’t be surprised to find gold bars sold at dispensing machine in Dubai or driving around Abu Dhabi as white gold Mercedes. But there are ways to green your gold.
Gold is not just a stable element on the periodic table, it is also used as “savings” in times of financial instability. While financial markets around the world fluctuate, gold pretty much remains stable.
Gold is a thing of beauty that like other resources on this planet can be ecologically mined and recycled.
Historically there were ancient mines in the Middle East along the Mesopotamian river. In today’s times, there are few known sources of gold in the Middle East except for Iran and the new Alsukari mine Egypt on the Red Sea.
With gold mines operating throughout the world in developed and non-developed nations alike, there is hidden environmental damage that goes along with the gold mining industry. Industrial gold mining usually emits contaminants to rivers, lakes and seas. In order to maximize gold extraction, mercury and cyanide is often used to amalgamate with the metal. See this organization Earth Works to be more informed on what companies are polluting, and how bad the situation is for the planet.
Gold that is mined using unfair labor is also ungreen, because this kind of gold takes advantage of people, and doesn’t give back to the local community. People who don’t demand proper protection and work conditions are prone to die from faulty mine construction if the mines collapse.
Like Blood Diamonds, there can be dirty gold.
How to buy cleaner gold?
If you are in the market for gold, whether for investment purposes or for small items like a wedding band, try and make your purchase a little greener.
1. Choose mines that use greener methods for gold extraction
A mining group in Colombia, for instance, are using natural plant-based materials from the leaves of balsa trees instead of mercury to separate their gold. It is being dubbed as “organic gold” and can fetch premium prices.
2. Buy gold where fair trade practices are being practised
The Fairtrade Foundation in the UK provides information on how to buy the most ethically produced gold. According to the organization, “buying Fairtrade gold makes a real difference to the lives of miners, their families and communities.
“Jewellery with the Fairtrade gold stamp is extra special. Buying it means you know the small-scale and artisanal miners were paid a fair price, giving them financial security. They also receive an extra amount of money to invest in building the future of their families and their communities, through education, medical care or environmental projects.”
3. Regift or recycle heirloom gold items
Ask your loved one or family members if there is any old gold in the family that could be used as an engagement ring or wedding band. (Or to pimp your ride). If you don’t like the style, ask a jeweller to update the fashion, or get your old gold remelted into something more your taste.
Some women in the Middle East still wear their gold instead of putting money in the bank. This can be a smart and sustainable way of saving. But when you are buying new gold, know: you can’t take it with you, but you can buy gold that leaves our planet a little greener, and better. If you have the money and resources to find it, then why not?
Strangely, Muslim men according to their practice level, may not be permitted to wear gold. This could explain the love of gold and gold leaf on objects of desire around the Middle East.
4. Buy gold from “awoke” companies committed to improving the planet
According to Catherine Raw, Chief Operating Officer, North America for Barrick Gold, it’s time for gold mining companies to wake up to the idea that investors are aware and want corporate social responsibility (CSR) or ESG (Environmental, Social and Governance) criteria to be met when they invest.
Environmental, Social, and Governance refers to the three central factors in measuring the sustainability and societal impact of an investment in a company or business.
ESG, a concept that is here to stay, says Raw to The Northern Mining news:
“ESG is not a new phrase, corporate governance, social responsibility, licence to operate, sustainability, these are all words that have been going on well at least since I came out of university,” she tells the mining magazine.
She elaborates: “I remember I did a course on how can mining be sustainable given it is exploiting finite resources. So this challenge is really only relevant today because the specialist investors that understood these risks and could deal with these risks are no longer the marginal buyer of mining stocks.
“The marginal buyer of mining stocks is now either the passive fund, that needs to justify its existence in the world, and so it claims it’s that oversight and corporate governance and ESG focus that it applies to all of its investments that is the way it adds value; or it’s the generalist investor, the institution, that is not used to taking the kind of risks that exist in our industry.
Raw cautions: “When you own a supermarket, or you own a retailer, or you own a tech company,” she added, “you don’t have the same kind of exposures. However, this can be a driver or has the potential to drive but noted that this is a driver or has the potential to drive M&A activity because investors are identifying management teams they trust, those management teams who are able to mitigate or manage the risks associated with ESG issues successfully and have a track record to do so. And those companies that slip up, are getting punished in a far greater way than they ever have done in previous cycles.”
Barrick Gold Corporation (NYSE: “GOLD”; TSX: “ABX”) is the second largest gold mining company in the world. Barrick has established joint ventures with a number of gold companies such as Toronto’s Loncor (TSX: “LN”; OTCQB: “LONCF”), a Canadian gold exploration company with significant projects in the Democratic Republic of the Congo.
The nature of the gold mining business today is moving ahead with mergers and joint ventures, and this approach will obviously have a knock-on effect to smaller and younger companies, like Loncor, and the way they approach ESG and ecological and social issues while drilling and mining.
The DRC, as one of the most mineral rich countries in the world, could benefit from some sane environmental governance. A surprising story here about how a Jordan bank bought a forest in the DRC to support an Islamic charity. It also highlights some folly and what we can learn when we try to impose our value system on others.
The importance of ESG can be heard at a recent event in Capetown, covered by The Financial Times, where Barrick head Mark Bristow basically said that if you are not part of the ESG ecosystem you will be irrelevant.
He was quoted as saying: “Even late capitalism’s supposedly unvarnished practitioners have suddenly discovered the merits of a social conscience and are now saying they won’t invest in a business that doesn’t have a satisfactory ESG,” Mr Bristow told the Investing in African Mining Indaba in Cape Town.
“To those people I say . . . welcome to the club. I have been arguing for a long time that a good business also has to be a good citizen particularly in emerging countries,” said Mr Bristow.
ESG is proving to shore up investments in the long run
According to Forbes: “Firms that pursue better ESG practices have higher quality management and better stock performance.
“Modern portfolio theory says that if an investor limits the pool of possible securities to choose from, the probability of maximizing returns for a given level of risk is reduced. But limiting the pool of possible securities based on ESG criteria has the opposite effect. The reason is that ESG criteria are key indicators of management quality, which helps avoid stock specific risk in a market with imperfect and asymmetric information.”